COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. Guillaume Mascot September 2014 THE INNOVATION IMPERATIVE FOR THE ICT SECTOR ITU Green Standard Week

2 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. THE ICT SUSTAINABILITY CONUNDRUM  ICT consumed 6% of global energy in 2013, at approximately Gigawatts;  As of 2013, worldwide telecommunications networks consumed approximately 69 gigawatts (1GW is the typical capacity of 1 nuclear power plant), the equivalent of 12 New York cities;  Energy costs account for 10-15% of the total network operating expenses (OPEX) and can reach up to 50% in developing markets with a high number of off-grid sites, or where only a poor quality electricity grid is available;  Smartphones and tablets will drive mobile traffic to grow up to 89 times by 2020 from 2010, causing energy use to grow exponentially.

3 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.  An interactive application to visualize new technology impact and relative benefits on network energy consumption  Forecasts trends in energy cost, consumption and carbon footprint  For network operators, architects, engineers and commercial decision makers POWER SAVINGS RELATIVE TO BASELINE BREAKDOWN OF POWER CONSUMPTION RELATIVE ENERGY EFFICIENCIES NETWORK DOMAINS GWATT Key Features FORECAST YOUR FUTURE ENERGY SAVING APPLY DIFFERENT TRAFFIC MODELS EXPERIMENT WITH NEW, MORE EFFICIENT TECHNOLOGIES NETWORK ENERGY CHALLENGES AND SOLUTIONS GWATT - A MIND SHARING INTERNET APPLICATION alcatel-lucent.com/bell-labs/GWATT

4 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. RESEARCH AND TECHNOLOGICAL INNOVATION GREENTOUCH FOR ECO-SUSTAINABILITY AND ENERGY EFFICIENCY SIGNIFICANT IMPACT FOR SERVICE PROVIDERS PORTFOLIO OF TECHNOLOGY ASSETS FOR FUTURE NETWORKS 48 MEMBERS and 350+ SCIENTISIS RAISING BAR FOR ICT INDUSTRY ON ENERGY INNOVATION 2013 PROGRESS & RESULTS 90% REDUCTION IN NETWORK ENERGY CONSUMPTION POSSIBLE WITH 2020 TRAFFIC GROWTH ACCORDING TO GREENTOUCH CONSORTIUM LATEST STUDY greentouch.org

COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. Take-Back / Recycling / Reuse Network Optimization Energy Efficient Operation Alternative Energies Design for Environment Product Stewardship Smart Manufacturing Eco Packaging ALCATEL-LUCENT ORGANIZATION & BEHAVIOR INNOVATION HOLISTIC LIFECYCLE APPROACH FOR ECO-SUSTAINABLE NETWORKS Efficient Transport

6 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.  Why do we perform eco-impact life cycle assessments (LCA)? o Customers, analysts, legislators and NGOs want it o Gauge progress, measure impacts / benefits, assess eco-opportunities  But… o Eco-impact LCAs are complex and data / time intensive o LCA data gaps and method inconsistencies needed to be addressed LIFE CYCLE ASSESSMENT Drivers and challenges Alcatel-Lucent tackled these challenges and defined an industry leading approach to LCA SAM: “Alpha from SustainabilitySAM: “Alpha from Sustainability”

7 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT’S ECO-IMPACT ESTIMATION METHODOLOGY Bell Labs pioneered the technique of LCA estimation by component categorization* Typically yields the largest eco-impact *Estimating the carbon footprint of telecommunications products: a heuristic approach. Published in the Journal of Mechanical Design, September 2010, Vol. 132 / Each component category has its eco- impact contribution characterized by its key materials and manufacturing processes

8 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT LCA ESTIMATOR Carbon footprint estimation for new products Full Life Cycle Stage Estimation (Example - % of Total eco-impact) Full Life Cycle Stage Estimation (Example - % of Total eco-impact)

9 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. LCA - LEADERSHIP & INDUSTRY STANDARDS DEVELOPMENT Alcatel-Lucent leadership and partnering activities Leadership within ICT sector guidance development Co-author – Telecom Network Services LCA Methodology section Joint development of L.1410 – LCA methodology for ICT goods, networks and services Partnered in the eco-assessment pilot of a service provider’s broadband service Results helped shape EC’s current initiative for developing Product Environmental Footprint Categorical Rules (PEFCR)

10 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.  Materials efficient product designs o Increasing functionality (e.g., more capacity, service, performance) per unit of electricity consumed o Occupying less physical space, weighing less and using fewer types of materials Example: 7750 SR - delivers faster service while using 50% less power and reduced cooling needs; and takes up 30% less space  meaning fewer components and raw materials used*  Improved materials selection o Optimal materials selection during the design phase delivers increased efficiency in material usage while offsetting other materials/ energy needs and their eco-impacts Example: Aluminum (~65% recycled content) employed in lieu of painted steel (~30% recycled content) for a product chassis / cabinet  Reduces raw materials extraction needs (due to higher recycled materials content)  Produces a light-weight product that uses less energy in shipping, installation and end-of-life treatment  Needs fewer materials for corrosion and finish protection ALCATEL-LUCENT MATERIALS MANAGEMENT Materials efficiency and selection * than other / previous generation products

11 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.  The issue: mining of minerals financing armed groups resulting in extreme violence and human rights violations in some regions o These minerals may become part of products after being smelted o The US law requires companies to report on their efforts to track the origin of the metals used  Alcatel-Lucent conflict minerals program: o Conflict Minerals Policy highlighting our commitment o Cooperation with industry associations to:  develop traceability tools  Engage the upstream supply chain (smelters) o Identification of impacted commodities and suppliers o Survey suppliers on conflict minerals and drive traceability improvements o Establish Alcatel-Lucent’s conflict minerals status o Provide Alcatel-Lucent conflict minerals information to customers and authorities o Offer stakeholders opportunities to review data and provide comments ALCATEL-LUCENT MATERIALS MANAGEMENT Conflict minerals traceability

12 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.  Alcatel-Lucent offers a complete take-back and recycling program for its customers and any telecommunications products that reach end-of-life o Very high recycling /reuse rate (97%) for EoL processed products /materials  7463 tonnes of electronic wastes handled in 2013  90% processed via approved global recyclers  7% remanufactured / resold / reused  1% treated via incineration  < 2% disposed via secure landfill  Working with our approved recyclers to achieve more efficient recycling and with increased strategic materials recovery – especially precious / semi- precious metals, rare / rare earth metals ALCATEL-LUCENT MATERIALS MANAGEMENT Recyclability / end-of-life management

13 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. LEAD RESPONSIBLE BUSINESS INNOVATION RESPONSIBLE BUSINESS INNOVATION OUR COMMITMENTS ECO-SUSTAINABILITY Developing eco-sustainable networks Innovative products, services and solutions that implement energy efficiency criteria to ensure eco-responsible end-to-end networks and enhanced network performance Holistic lifecycle approach (from design to end of life, materials management, packaging) Bell Labs Research, involving worldwide +50 scientists and collaborations with other companies, research institutes & universities Breakthrough energy efficient solutions: Photonic Service Switch, Extensible Routing System, lightRadio Reducing our carbon footprint Leading the telecoms industry GreenTouch is a Bell Labs initiated Global Research Consortium creating a technology roadmap to make telecoms networks up to 1,000 times more energy efficient Over 48 member organizations with 350+ leading scientists Leading Green ICT cooperation with other organizations such as GeSI, ITU-T, GreenGrid, Carbon Trust, ITRS Recognized by World Economic Forum as an industry-led best practice toward sustainability Carbon emissions tracking & reporting : 3 phase plan to reduce our footprint by 50% by 2020 Living our best practices : electricity consumption, tele-working and commuting Managing resources: reducing paper and water use, emissions, discharges and waste Raising employee awareness

14 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ECO-SUSTAINABILITY 2013 KEY PERFORMANCE HIGHLIGHTS o Our Bell Labs Research programs focus on dramatically improving end-to-end network energy efficiency and high energy and power consumption challenges o We maintain high product stewardship and factor eco-impact of our products through full life cycle from design to end of life reuse and recycling o Since 2008, we have reduced the carbon footprint associated with our operations by 32% — more than 267,000 metric tons of CO2 equivalents — slightly more than halfway to our ultimate goal of 50%. alcatel-lucent.com/sustainability/environment

15 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. RESPONSIBLE BUSINESS INNOVATION: RAISING THE BAR “MY AMBITION IS FOR ALCATEL-LUCENT TO BE THE RECOGNIZED LEADER IN SUSTAINABILITY AND RESPONSIBLE BUSINESS INNOVATION FOR THE TECHNOLOGY INDUSTRY.” MICHEL COMBES, ALCATEL-LUCENT CEO Learn more: Video: Read our Report: Contact us:

16 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.